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Washington - With President Barack Obama heading back to
Washington, Republicans heaped pressure on Democrats on Wednesday to lay out an
11th-hour deal preventing taxes from rising for all Americans.

The president cut short his Christmas vacation in Hawaii and
was to fly back to the US capital, five days after urging Congress to end a
bitter deadlock over how to avoid the so-called "fiscal cliff" and
its hundreds of billions of dollars in tax hikes and spending cuts in 2013.

Complicating efforts to avoid disaster, Treasury Secretary
Timothy Geithner announced that the US Treasury will need to take
"extraordinary measures" to postpone the day the US government could
default on its liabilities.

Geithner said in a letter to Senate Majority Leader Harry
Reid that the nation will reach its statutory $16.39 trillion debt limit - a
ceiling imposed by Congress - on Monday, 31 December.

The measures would create about $200bn in headroom that
under normal circumstances would last about two months, to the end of February.

"However, given the significant uncertainty that now
exists with regard to unresolved tax and spending policies for 2013, it is not
possible to predict the effective duration of these measures," Geithner
said.

Trading blame

Experts say a failure to strike a compromise on the matter
by New Year's Eve could plunge the world's biggest economy into recession, and
wrangling over the debt ceiling will only increase the uncertainty.

But members of the House and Senate have shown no signs of
nearing any accord, big or small, that would stop taxes from rising and deep,
mandated spending cuts from kicking in from 1 January if Congress does not act.

"The White House hasn't reached out to us, nor have
Senate Dems. They seem to be working on this on their own," Stewart said.

Democrats and Republicans traded blame last week over the
failure to reach a deal and Republican House Speaker John Boehner punted to the
Democrat-led Senate, asking Obama and Reid to draft legislation that could pass
both houses.

Boehner insisted on Wednesday that "lines of
communication remain open", but held firm that the Senate must make the
next move.

Eerie calm

He suggested the chamber take up bills already passed by the
House, notably a bill extending all tax breaks and another that replaces
automatic spending cuts with ones that do not affect national security.

"If the Senate will not approve and send them to the
president to be signed into law in their current form, they must be amended and
returned to the House" for consideration, Boehner said in a statement with
his Republican leadership.

"We will continue to work with our colleagues to avert
the largest tax hike in American history."

As an eerie calm settled over Washington ahead of the mad
dash to avoid the crisis, a senior Democratic aide said there was "no
progress" to report.

"We need co-operation from Republicans to move
anything, large or small," he said.

The Senate will be back in session on Thursday, giving them
less than a week to work out a deal that avoids the cliff.

With the deadline fast approaching, Obama has pared back his
hopes for a year-end grand bargain on taxes and substantial spending cuts as
part of a 10-year deficit-cutting bill.

Compromise

Instead, he said Congress should work out a stop-gap that
protects middle-class taxpayers while laying groundwork for further deficit
reduction next year.

Obama successfully campaigned for re-election on the back of
his support for an extension of Bush-era tax breaks for those in households
earning up to $250 000 a year.

In talks with Boehner on a larger compromise, he had offered
to raise that threshold to $400 000.

But with Republicans in the House majority, even if all 192
Democrats in the chamber voted for an Obama-backed plan, it would still need
support from at least two dozen Republicans.

Most Republicans in Congress have signed a no-new-taxes
pledge, however, and it remained unclear just how many would violate that oath
in order to strike a deal.

Staunch conservatives last week revolted against Boehner's
alternative proposal to prevent a 2013 tax hike on anyone making under $1m per
year.

Republicans could balk at voting on any tax plan until after
1 January.

Going over the cliff would force all tax rates to rise.
Instead of actively voting to hike rates on the wealthy, Republicans could then
turn around and vote to reduce middle-class taxes to pre-2013 rates.

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